New York
Blackstone Group LP rode a widespread market advance in the second quarter, earning 36 per cent more than a year earlier. The results fell short of analysts’ estimates.
Economic net income, which reflects both realised and unrealised investment gains, was $705.4 million, or 59 cents a share, compared with $519.8 million a year earlier, New-York based Blackstone said in a statement Thursday. Analysts had expected earnings of 62 cents a share, the average of 13 estimates compiled by Bloomberg.
Blackstone’s real estate business, its largest unit by assets at $104 billion, led the firm’s sales in the quarter. It sold off $4.6 billion of holdings, including shares of Hilton Worldwide Holdings Inc. and a string of Equity Office Properties assets.
Private equity, which oversees $100 billion, sold $2.8 billion in assets, including part of its holding in food-service distributor Performance Food Group Co. and its remaining stake in SeaWorld Entertainment Inc.
While the firm continues to attract attention given Chief Executive Officer Steve Schwarzman’s close ties to the Trump administration, it also made big announcements of its own in the quarter. Saudi Arabia’s Public Investment Fund agreed to anchor a $100 billion infrastructure ambition that Blackstone seeks to build out over the coming quarters.
The firm also celebrated its 10-year anniversary as a public company with the stock little changed from its initial listing price, continuing to fuel discussions over public-market valuations of alternative-asset managers.
On the personnel front, the firm promoted Dwight Scott to president of its credit unit, GSO Capital Partners, as Blackstone deepens its bench of leadership candidates. Succession in the industry continues to be a hot-button topic as founders age and firms begin clarifying plans for transitioning to the next generation.
Blackstone reported results before the start of regular trading in New York. The stock closed Wednesday at $34.78 and is up 34 per cent, including reinvested dividends, this year.
Distributable earnings, which reflect cash profits on asset sales and fund management fees, were $781.4 million, compared with $494.9 million a year earlier. Blackstone said it will pay stockholders a dividend of 54 cents a share on Aug. 7.
The firm’s private equity portfolio appreciated 2.8 per cent in the quarter and its real estate holdings gained 5.4 per cent, both exceeding the 2.6 per cent gain posted by the S&P 500 index of large US companies. Peers including Carlyle Group LP, KKR & Co. and Apollo Global Management LLC are scheduled to report results in the coming weeks.
Publicly traded private equity firms must mark their holdings to the market each quarter, even though their typical strategy is to hold assets for years. That makes economic net income, which in part reflects these unrealised changes in value, merely a snapshot of assets that may have a long runway before being sold.
Overseeing $371.1 billion across private equity, real estate, credit and hedge funds, Blackstone is viewed as a bellwether for the alternative-asset industry. Peter Grauer, chairman of Bloomberg LP, the parent of Bloomberg News, is a non-executive director at Blackstone.
